Algeria: Insurance industry acts to counter hit to business
Source: Middle East Insurance Review | Feb 2021
Insurers in Algeria have proposed certain measures to mitigate the negative effects of several adverse developments in the industry, according to Alliance Assurances CEO Hassen Khelifati.
In an interview with Liberty Algeria, Mr Khelifati said that the proposals, tabled through the Algerian Union of Insurance and Reinsurance Companies, cover technical, accounting, financial and legal measures specific to the sector. Several measures have so far been carried out and these included:
- The 2021 finance Bill provides for the repeal of the pollution tax.
- The Insurance Supervision Commission has stipulated that insurance coverage will only take effect when the policyholder has paid the premium for the insurance policy. This is a move to resolve the problem of policyholders owing premiums due to insurance companies.
- A multilateral MoU on motor insurance limiting tariff discounts to a maximum of 50% has been approved and the pact entered into force on 1 January 2021. The MoU also sets a floor for motor premium rates and bans guarantees provided free of charge to customers, to curb cut-throat competition among insurers.
The insurance industry plans to extend similar MoUs to other branches of business in the future, said Mr Khelifati, adding that the automotive MoU is a first step as motor business is the most important branch.
Challenges
Mr Khelifati said that the Algerian insurance industry has been facing challenges for several years. Among them is the economic situation which began to deteriorate seriously in 2014 because of the decline in oil prices. He said, “Unfortunately, the structural, necessary, deep and irreversible economic reforms have not been initiated.”
In addition, the unprecedented health crisis, linked to COVID-19, has exacerbated the vulnerability of Algeria’s “undiversified, underdeveloped, non-modernised” economy that is dependent on oil revenues.
The combined loss suffered by the Algerian insurance industry as a result of COVID-19 has been estimated at DZD12bn ($90.6m) for the nine months to September 2020, according to Mr Khelifati. The insurance sector, however, has not requested direct financial assistance for insurers.
DZD100 = $0.75